Consumer Behaviour and the Various Factors That Tend to Affect It - Porsche Cayenne - Case Study Example

Consumer Behavior Name Course Tutor Date TABLE OF CONTENTS 1. EXECUTIVE SUMMARY 2. INTRODUCTION 3. DISCUSSION a. Brief Description of the Product b. External Factors Affecting Consumer Behaviour c. Family, social class, culture, sub-culture, public policy and consumer protection d. Relevance of Culture and Core Values e. Relevance of Sub-cultural Aspects of Consumer Behavior (Generation Y/Generation X/Baby Boomers/Elderly Consumers) f. Family Life Cycle and the Dynamics of Husband-Wife Decision-Making 4. CONCLUSION 5. REFERENCES EXECUTIVE SUMMARY Every time we go the market or shop or even a supermarket, we become consumers. A consumer is anyone who buys goods and/or services from the manufacturer for the higher end-use (Hebidge, 1981). Consumers tend to consume products and/or services that have been made available in the market. This behaviour of buying is considered to be a process of searching for, selecting, using, purchasing as well as depositing products and services, in the satisfaction of people’s wants and needs (Pantano, 2011). In this particular paper, we will take a closer look at Consumer Behaviour and the various factors that tend to affect it. We will also provide a brief overview of the selected product. In focus will be the external factors and their impact in influencing consumers’ decision making process. Some of the external factors to be included are social status, culture and family influence. The relevance of the family life cycle as well as the dynamics of husband-wife decision making when it comes to the selected product will be discussed. This paper aims at identifying whether the chosen product relates to the affluent or non-affluent consumers, discussing relevant social class categories as well as identifying the possible segmentation strategies for affluent or non-affluent markets. Theories regarding Consumer Behaviour will also be discussed together with their relevance to the subject matter. INTRODUCTION As it has been mentioned earlier, consumer behaviour refers to the process by which people select, search for, dispose of, use and purchase products and services, in satisfaction of their wants and needs (Holt, 2002). Psychological processes are usually incorporated in consumers’ decision making process when finding ways to solve their needs regarding products and services. There are usually different processes incorporated in the consumer behavior for instance initially trying to find what produces and/or services a consumer would like to consume, selecting only those produces and/or services that promise greater utility and estimating the available finances which the consumer can spend (Solomon, 2003). The consumer then analyses the prices that are already set for the products and/or services and makes an appropriate decision regarding what he/she should consume (Hawkins, Roger & Coney, 2003). These processes will be discussed in detail under the various factors influencing Consumer Behaviour. Consumers are viewed as crucial factors in the sales of any good or service. That is why whenever a new product or service is introduced to the market, understanding consumer buying behaviour becomes vital to manufacturers (Hebidge, 1981). As it has been observed in the past, buying any product or service comes about as a result of 2 main reasons that is the necessity driven buying behaviour and the impulse buying behaviour. Under necessity driven buying behaviour, basic needs are the first and most basic priorities where restricted products or services are purchased (Pantano, 2011). On the other hand, impulse buying involves lack of analysis in as far as purchasing a product or service is concerned. This is to say that impulsive buying behavior does not take into consideration preconceived factors but rather how the product feature and packaging is presented (Holt, 2002). This is an age where class and luxurious lifestyles rule the day. Manufacturers have realized the high demand that is currently in the market for luxurious products and services and are aiming to provide its clientele with the best of what they have. Things such as flashy cars, expensive houses and generally and expensive lifestyle are considered the ‘in-thing’ where even the media has made every effort of emphasizing this. An example of a product that is currently on demand is the luxurious Porsche Cayenne. DISCUSSION Brief Description of the Product German manufacturer Porsche did it again in the year 2002, when he came up with the 5 seat mid-size luxury vehicle which was named Porsche Cayenne (Solomon, 2003). This particular model got its foundations from Porsche and is currently shared with the Audi Q7 and Volkswagen Touareg (Hawkins, et al., 2003). In the year 2010, the second-generation version of Cayenne was launched, and whose aspects of vehicle design, production as well as tuning are carried out in-house at Porsche (Hebidge, 1981). Other versions of Porsche Cayenne were soon on the market including a recent hybrid version of it. The current model is quite short as compared to the previous models, having more muscular curves, shortened rear window and headlights that got their inspiration from the Camera GT (Pantano, 2011). Porsche Cayenne is powered by a 3.2L VR6 engine that produces 250 PS and acceleration is from 0 to 60 mph in 7.5 seconds (Holt, 2002). Now, even for those who are not huge fans of vehicle models or have no idea what has just been illustrated above, the Porsche Cayenne appears to be a luxury vehicle that every man or rather family would desire to possess. Even the way the vehicle is currently being advertised in the newspapers, media and magazines makes it impossible to ignore (Solomon, 2003). Families, especially those of high income, are willing to spend thousands of dollars just to become future proud owners of such a contemporary vehicle model. Porsche is a vehicle manufacturing company that has witnessed Consumer buying Behaviour since its inception. External Factors affecting Consumer Behaviour As it has been mentioned earlier, Consumer Behavior is the process where consumers select, purchase and consume goods and services for their satisfaction in terms of wants and needs (Hawkins, et al., 2003). Consumer behavior involves a number of processes that have also been aforementioned, such as finding out what one would like to consume, estimating the amount of money to be used and making decisions regarding if the product or service is worth purchasing (Hebidge, 1981). There are various factors that tend to affect consumer buying behavior for instance cultural, psychological, social and personal factors (Pantano, 2011). Factors such as these can be categorized into 2 main factors that are internal and external factors. Internal factors, also referred to as personal factors, are a representation of consumer’s ability to enjoy direct benefits from the product or service in question (Holt, 2002). Internal factors are usually dependent upon a consumer’s desire to achieve goals that are connected to other internal and external factors (Solomon, 2003). Perception is also part of internal factors that tend to influence a consumer’s behavior and allows one to justify their action on the other hand social norms are perhaps the most permanent external factors influencing consumer behaviour. The fact that brand names or new trends are increasingly competing to become popular with consumers, affects what any given consumer will choose for themselves (Hawkins, et al., 2003). Cultural values are also part of external factors influencing consumer buying behaviour. Some companies such as Porsche have begun to incorporate advertising campaigns that boast original products as an aspect of the products themselves (Hebidge, 1981). Consumers intending on purchasing this kind of luxurious vehicle are also faced with factors that have been mentioned. These factors are discussed in detail below. Family, social class, culture, sub-culture, public policy and consumer protection The family is perhaps one of the most influential factors of consumer buying behavior in any given society. It is usually made up of parents and siblings where from the parents, one intending on purchasing a car like Porsche Cayanne acquires an orientation towards economies, politics and even religion (Pantano, 2011). Parents also provide a potential consumer with a sense of love, self-worth and personal ambition (Holt, 2002). Even if the one intending on purchasing such a luxurious commodity no longer keeps in touch with their parents or family, their influence on the potential consumer’s behavior is quite significant in nations where parents live with grown children (Solomon, 2003). In the past, Porsche witnessed an increase in sales from singletons but this has recently changed and families have come to the attention of the company with regards to consumer buying habits. Manufacturers as well as marketers are more interested in the roles and relative influences coming from family members where purchasing large variety of products and services is concerned (Hawkins, et al., 2003). Social class is another key factor influencing consumer behaviour. In any given society, some form of social class exists and this is considered to be important by marketers. The consumer buying behaviour in a particular social class is the same and therefore marketing activities could be fashioned as per the different social classes (Hebidge, 1981). It is, however, important to note that social class is not dependent upon income but upon various other factors such as occupation, wealth and education (Pantano, 2011). Unlike social status which normally revolves around the family and its position in the society, social class focuses on the consumer and their occupation. Purchasing a vehicle like Porsche Cayanne says a lot about a consumer’s social class. It usually means that the individual is wealthy and has an occupation that is well paying. It also means that the individual can afford some time off and enjoy his luxurious lifestyle with family, friends and even peers (Holt, 2002). Similar to family, culture is also one of the most basic causes of a consumer’s behaviour and wants. Marketers in this day and age are making efforts to notice cultural shifts that might lead to new products that may be wanted by potential consumers or to increased demand of an already existing product (Solomon, 2003). While growing up, children are taught basic values, wants and perception from their family members and those around them. Today, children grow up with television advertisements that tell them it is a must for them to have luxurious houses, cars and lifestyles. Porsche Company can testify to the fact that the demand for luxury Porsche vehicles has increased over the recent past, especially for their latest hybrid version (Hawkins, et al., 2003). Within each culture, there is a sub-culture. A sub-culture refers to that which shares distinguishing patterns of behavior as well as values that are different from the overall culture (Hebidge, 1981). Sub-cultures can consist of racial groups, religions, nationalities or groups of individuals having a common geographical location (Pantano, 2011). Today, marketers have realized the important role that sub-cultures plays in consumer behaviour. They are taking advantage of these groups by partitioning the market into numerous small portions (Holt, 2002). This is done by designing products as per the needs of a particular geographic group, race, religion or nationality. Consumers in this day and age are quite demanding as compared to how it was in the past. That is why marketers and manufacturers are working hard to understand consumer behaviour in order to be successful in a changing environment (Solomon, 2003). The 21st Century has witnessed customer dissatisfaction and thus calls for their protection of rights. Governments have come up with rules, regulations and laws in an effort of nabbing defaulting manufactures, distributors and those who may be connected to the business, and taking them to court (Hawkins, et al., 2003). There have been a number of issues that have been experienced with regards to consumer behavior, for instance, dissatisfaction with the performance of the product. The reason why Porsche Company has managed to increase its sales in the recent past is because the management noted that with the increased demand and changing environment, consumer preferences tend to also change (Holt, 2002). That is why the company launches newer models so as to not only keep up with the current trend and demand, but also satisfy consumers as per their needs and wants. Government should therefore take into consideration issues affecting consumer buying behaviour and formulate policies that protect their rights (Hebidge, 1981). Relevance of Culture and Core Values The onset of the 21st Century has seen a number of companies and organizations faced with growing multicultural marketplace that has been caused by heightened competition as well as globalization (Pantano, 2011). Multicultural populations have also been as a result of migration patterns and media who have influenced marketers by creating alternative consumer behaviors and wants (Holt, 2002). Recently, researchers have noticed that consumers are becoming more and more alike because of the growth witnessed in multinational organizations, travel and mass communication. Cultural influence on consumer behaviour is natural and automatic to an extent where such influences are taken for granted (Solomon, 2003). It is not possible to fully comprehend consumption unless one understands the cultural context in which purchases are made. Culture tends to provide identity or a sense of it, where an understanding of attitudes, behaviors and acceptable behaviors is required (Hawkins, et al., 2003). Culture comprises of an individual’s core values, customs or traditions and beliefs which lead a society towards a particular consumption behavior (Hebidge, 1981). As a whole, culture is an accumulation of shared rituals, traditions and meanings that are not only adapted but also integrated into the society. This society then characterizes human societies and shapes them towards a particular consumption trend and habit (Pantano, 2011). Relevance of Sub-cultural Aspects of Consumer Behavior (Generation Y/Generation X/Baby Boomers/Elderly Consumers) As mentioned earlier, sub-culture tends to constitute race, religion and nationalities. Within these aspects there are different generations existing within a given society. These generations also influence consumer buying behaviour. Marketers today take into consideration consumer needs, preferences and wants. With reference to Porsche Cayanne, not all generations would consider it a priority or worth purchasing. Recently American sociologists have come up with their own classification of generations that exist in today’s society and which also tend to influence consumer buying behaviour. These generations include generation of baby boomers, characterized by the post-war baby boom of the year 1943 to 1963 (Holt, 2002). Generation X refers to an unknown generation which existed between 1963 and 1983 while Generation Y refers to those members who leave school in the new millennium (Solomon, 2003). The years of birth are between 1984 and 2000 (Hawkins, et al., 2003). ‘Baby Boomers are the elderly generation and majority of these individuals range from the age of 45 years to 65 years. Their core values included economic welfare, interest in stability, honesty, friendship, teamwork, team spirit as well as optimism (Hebidge, 1981). This particular generation was considered to be excellent experts where things were valued in terms of durability and functionality (Pantano, 2011). It is important for ‘baby boomers’ to inform their families and friends about purchasing interesting, original and new products. They do not really care about the status of the products. That is perhaps why Porsche Company does not have many clienteles from this particular generation. Generation X or the unknown generation had their core values established before the year 1993. Some of their values include high awareness, technological literacy, quality education as well as the ability to change and have thinking of their choice (Holt, 2002). In the course of this particular generation, hypermarkets and supermarkets also came into the picture. Generation X is ready to spend more money on their convenience and have the privilege of buying a variety of different good quality products in one place (Solomon, 2003). This generation focuses on emphasizing their individuality as well as uniqueness. Consumer buying behavior of Generation X is characterized by the choice to buy without any pressure from reference groups. This generation is one of the most consistent clientele of Porsche Company since their purchasing behaviour tend to add to their personality by possessing something which no one else has (Hawkins, et al., 2003). Generation Y or generation Millennium is represented by members who were finishing high school in the new millennium, and who were born between 1984 and 2000 (). This particular generation is still forming and has core values such as moral responsibility, freedom, dignity (Pantano, 2011). Generation Y is an era brands with iPhone, Tablets and iPads as key leaders. Unlike Generation X who value shopping in supermarkets and hypermarkets, Generation Y sees such places as places of fun. Shopping for this particular generation is a cultural center where individuals go to have a cup of coffee or watch a movie (Holt, 2002). Generation Y tends to have the desire to make shopping decisions easy and more fun. Generation Y is careful as well as law-abiding (Solomon, 2003). When it comes to decisions of purchasing vehicles, this generation pays more attention to the impact the vehicle will have on the environment. They are also currently Porsche’s large clientele especially where the hybrid Porsche Cayanne is concerned (Hawkins, et al., 2003). Family Life Cycle and the Dynamics of Husband-Wife Decision-Making As it has been mentioned earlier, the family plays an important role in consumer behavior. Marketers have turned their attention to the roles as well as relative influences of family members where purchasing large variety of products and services is concerned (Hebidge, 1981). It is important for marketers in the 21st Century to know the family structure as well as understand its consumption characteristics. Porsche is a company that has realized the family to be a subset of a household (Pantano, 2011). Households constitute individuals who live and occupy a house. Recent studies have revealed that major items such as electrical appliances, washing machines, vehicles and housing are mostly used by households as compared to individuals (Holt, 2002). Households tend to share and possess numerous items whereas individuals do not always possess numerous items individually (Solomon, 2003). Different phases of family life cycle tend to transform the consumer buying behaviour. When children are young, all the decisions regarding purchasing products such as toys and clothes, and services are made by the parents. As they grow up much of the decisions are left to them as the preference of purchasing products and services also change (Hawkins, et al., 2003). Once they commit themselves to marriage, their preferences change yet again as they now have to keep in mind a second or third party, referring to wife/husband and children. Buying preferences are transformed with every stage of the consumer’s life cycle. That is why companies such as Porsche take into consideration the family life cycle to enable them better access to consumer’s needs and wants (Hebidge, 1981). Major decisions regarding purchase of a new house, car, which college to attend and vacation trips are usually made within the context of a family setting (Pantano, 2011). Family life cycle provides marketers and manufacturers with the opportunity for product trial and exposure. Consumption values are then passed on to family members. Today, advertising managers are more interested in knowing which spouse tends to have greater influence while making buying decisions. All purchases that are carried out by a family adhere to a certain decision making process (Holt, 2002). The character as well as extent of interaction between a husband and wife brings about a crucial dimension in decision making process (Solomon, 2003). Marketers have discovered that no sale can be considered effective if favorable decisions are not made by a buyer with regards to a particular product of a company. The dynamics of purchase decision making of a husband and wife are part of the factors that affect consumer behaviour. Some of these dynamics include decision making of husband and wife for different consumer non-durables such as ‘the wife more than the husband’, ‘the husband more than the wife’, ‘husband only’, ‘wife only’ and ‘both the husband and wife exactly the same’ (Hawkins, et al., 2003). What marketers need to realize is what the most important aspect of the buying process really is. The actual activity of making, who actually goes shopping and the buying are things that reveal the aspects of consumer behaviour (Hebidge, 1981). In the United States and many other different parts of the world, husband-wife involvement has traditionally differed by product category. The wife has all along acted as the family’s main purchasing agent for things like sundries, staple-clothing items and food (Pantano, 2011). The husband on the other hand has all along been charged with the responsibility of purchasing items such as cars, houses and land. This is no longer the case. Today, traditional purchasing roles have drastically been transformed and marketers are wise to recognize both men and women as possible targets (Holt, 2002). Unlike in the past where decisions to purchase vehicles such as Porsche Cayanne were solely left to the husband, today, both husband and wife can share in the decision making process to purchase such a vehicle. In the case of expensive products and services like housing or vacations majority of husbands and wives participate in joint decision making (Solomon, 2003). Marketers have also noted that men and women tend to respond differently to marketing messages for instance while women value connections and relationships more, men tend to relate more to competition and place higher priority on action, rather than people (Hawkins, et al., 2003). Such responses affect or influence consumer buying behaviour. CONCLUSION In any given company or organization, the Marketing Department is charged with the responsibility of understanding as well as satisfying consumer desire, wants and needs. Consumer behaviour tends to incorporate all aspects of disposal, utility and buying of goods and services. As it has been discussed above, social, personal, emotional and cultural forces greatly influence the definition of consumer buying behaviour. Culture, sub-culture and social class also play an important role in the finalization of consumer behavior. Additionally, consumer behaviour is influenced by one’s personality traits where these traits change with the life cycle. That is why companies and organizations need to think or rather see beyond the consumer buying behaviour and instead analyze the actual buying process. Porsche Company has realized this fact and is making all efforts for the satisfaction of consumer wants, needs and desire. 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